Centuria Bass Credit Fund – Wholesale Investors only

The investment objective of the Fund is to provide investors with strong Risk Adjusted Returns by investing in a diversified portfolio of primarily first mortgage property credit transactions. The Fund will seek to achieve this objective by lending to Centuria Bass Credit SPVs that will be investing in loan syndicates originated by Centuria Bass Credit and managed by the Investment Manager (Loans). In addition to first mortgage property credit financings, the Fund may invest directly or indirectly in other loans of a similar or related nature with property security, and to the extent permitted under law, other managed funds and other money market investments. Upon maturity of the Fund’s investments, the Fund is repaid capital which will be recycled.

The Fund also aims to provide cash distributions to investors on a quarterly basis.

The target IRR is 6 - 10% per annum. The IRR is the target return intended to be achieved by the Fund for the Term. The IRR is not guaranteed.

The Trustee will only make investments and Loans which meet the investment selection criteria. The Fund may make Loans to or investments in third parties as well as to related parties of the Investment Manager.

The Trustee will not use derivatives for interest rate management in respect of the Loans.

The Trustee may borrow money, for example, in order to provide short-term financing to the Fund or for any other purpose that the Trustee considers to be in the best interests of Unit Holders. The Trustee’s liability to repay debts will rank ahead of payments to Unit Holders.

The Fund will adopt a strong investment bias towards senior secured property credit transactions that adhere to the Fund’s Investment Guidelines. The Fund’s direct and indirect investments will include:

• first mortgage debt – secured land, residual stock and/or construction loans;
• second mortgage debt – secured land, residual stock and/or construction loans; and
• credit transactions of a similar or related nature with property security.

Typically, these property credit transactions will be sourced through Centuria Bass Credit’s extensive origination network, including financial brokers, corporate advisers, builders and developers. The Investment Manager may decide to invest in other similar transactions in order to achieve the Fund’s investment strategy at an acceptable level of risk.

To the extent permitted under law, the Fund may hold any nondeployed cash in an at call account and/or term deposits with a major Australian bank or suitable proxy (to the extent permitted under law).

In its selection of investments, the Investment Manager will rely upon Investment Guidelines which include limits on geographical exposure, single investment exposure, maximum term of individual transactions, and single borrower exposure, to manage the Fund’s underlying property credit transaction risk.

The Trustee will generally make Loans to such SPVs and in such circumstances that meet the criteria listed above, which form the Investment Mandate.

Upon maturity of the underlying property credit transactions, the Fund is repaid capital which is then recycled. The Fund aims to provide investors with an income stream by offering quarterly distributions, subject to cashflow availability.

There is no guarantee the Fund will achieve its investment objective.

The Investment Manager of the Fund adopts a proven investment process to evaluate prospective property credit transactions.

At its core, the investment process focuses on the preservation of capital and achieving superior risk-adjusted returns.

The Deal Team adopts a rigorous approach to reviewing prospective property credit transactions, performing a ‘deep dive’ analysis on the credit through detailed interviews with key members of the guarantor group, third-party specialists, and other independent data sources.

The prospective property credit transaction is then presented to the Investment Committee as part of the Investment Manager’s iterative review process. The Investment Committee is responsible for critically evaluating the credit and adopting a conservative, downside-review approach to each opportunity, and is comprised of experienced credit investors. In certain circumstances where a potential conflict may arise, a transaction may require third party review before being approved by the Trustee or any other approvals that the Trustee considers appropriate to satisfy its obligations and duties to Unit Holders.

Unanimous approval is required from the Investment Committee before a prospective property credit transaction proceeds to the structuring and loan execution phase (which is undertaken with Centuria Bass Credit). Following loan execution and financial close, the property credit transaction is actively managed by the Deal Team throughout its ordinary life cycle (between 4 – 36 months) to ensure ongoing compliance with covenants and other financial conditions.

The Deal Team’s active management of the property credit transaction thorough the life cycle helps generate improved risk-adjusted returns upon repayment.

The Investment Manager adopts an ‘end to end’ approach to managing property credit transactions, with members of the Deal Team responsible for each stage in the lifecycle of the underlying property credit transaction. From sourcing, reviewing and monitoring of the property credit transaction to repayment/exit, each member of the Deal Team is responsible for the success of the Fund’s portfolio of loans. The Deal Team will be supported by a senior dedicated portfolio management resource from Centuria Bass Credit.

Whilst labour intensive, the Investment Manager believes this approach to staffing better aligns interests across the team and produces better outcomes to its property credit transactions.

Investment into the Centuria Bass Credit Fund provides Unit Holders with access to a diversified portfolio of mid-market property credit transactions and other loans with property security.

In keeping with the Fund’s conservative nature, the following portfolio guidelines will be in place (post ramp-up) (Investment Guidelines):

• a maximum of 15% of the Net Asset Value of the Fund will be invested in any one investment;
• at least 75% of the Net Asset Value of the Fund will be allocated to first mortgage property secured senior debt 5;
• 100% of the Fund’s investments will be secured by a first or second mortgage over property;
• a maximum of 20% of the Net Asset Value of the Fund will be allocated to any one borrower; and
• a maximum of 65% of the Net Asset Value of the Fund allocated to any one geography.

Further diversification will be targeted via the construction of a portfolio with a mix of projects to limit exposure to any one particular project and/or single borrower. In practice, the Investment Manager will aim to construct the Fund’s portfolio incorporating a range of property credit transactions. For example, a sample targeted portfolio may consist of a mix of construction (50%), residual stock (20%), bridging finance (20%) and tactical (10%) transactions.

The Centuria Bass Credit Fund (CBCF) is an unregistered managed investment scheme available for investment from wholesale investors only. The Trustee of CBCF is Bass Financial Services Pty Ltd ACN 617 409 588, AFSL 499339. This EDM has been issued jointly by Centuria Bass Credit Pty Ltd (Centuria Bass) and Centuria Funds Management Limited (AFSL 479 875).

An investment in the CBCF carries risk. As the Fund invests in commercial property debt it carries the usual credit risks associated with investing in debt funds. Risks can impact on distribution and capital returns over the term of the Fund. It is important that you read the IM and understand the risks of investing. Centuria Bass and its associates will receive fees in relation to an investment in the Fund as disclosed in the IM.

Investment in the Fund is subject to risk including possible delays in payment or loss of income and principal invested. Centuria Bass does not guarantee the performance of the Fund.